What is a Liability?

By Jocelyn Black Hodes, DailyWorth's Resident Financial Advisor

June 21, 2013

A liability is a legally-binding obligation to settle or pay back a debt. In the case of a company, a liability is recorded on its balance sheet and can include accounts payable, taxes, wages, accrued expenses and deferred revenues. Current liabilities are debts payable within one year, while long-term liabilities are debts payable over a longer period.